Don't Ignore This Chart!

Retail SPDR Hits Moment-of-truth


The Retail SPDR (XRT) is at its moment-of-truth with a long-term bullish pattern battling a short-term bearish pattern. Long-term, the ETF formed a double bottom and broke resistance with the July surge. This breakout zone turned into support with a successful test in early August. After a sharp decline from late August to early September, the ETF formed a flat consolidation near this support zone. Technically, a consolidation after a sharp decline is a bearish continuation pattern. Thus, we have the bullish double bottom breakout battling the potentially bearish flag. More after the jump....

Usually, the long-term pattern carries more weight, but I am concerned with relative weakness over the last several weeks. Notice that the price relative (XRT:SPY ratio) rose from mid May to mid August and then turned down. The short-term flag is the first pattern to watch for a resolution here. A break below 43 would confirm the flag and negate the double bottom breakout. A successful test of support and upside breakout at 44 would keep the double bottom alive. 

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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